US-domiciled ETFs


#1

The prelaunch stock list has a juicy section of ETFs that all EU brokers have blocked for EU citizens.
( Details https://www.bloomberg.com/news/articles/2018-02-23/the-unforeseen-boost-to-europe-s-etfs-as-spy-no-longer-an-option )

Has ninetynine found a loophole and will offer the ETFs once live?


#2

No - will be the answer, I’m sure.

In the QQQ example there is a European version - the EQQQ ticker - that produces a KIID and is therefore MiFID compliant.

After some research (I’m dull and have nothing better to do!) I don’t believe there is a loophole here. The option to ‘make’ the KIID doesn’t seem legal. There are rules around who can ‘manufacture’ the legal sales documents. So if the ETF provider doesn’t make a KIID then it’s just not sellable in Europe. So you’re have to find those with European variants.

Gotta love MiFID rules.

Thankfully the ETF pool in Europe is long and deep. And fees are coming down all the time as the race to the bottom (ie Fidelity, Schwab 0% ETFs) is on.


#3

In PRIIPs isnt written that only issuer can create KID. Read Article 13 of the PRIIPS.


#4

A loophole I’ve heard of but not tried (yet) are options: Buy an in-the-money option on the ETF which is expiring soon and execute it. Alternatively, find a broker that offers a CFD on it.
Both ways incur additional expenses and might be worse from a tax point of view. So, I think it only makes sense for ETFs that don’t have an equivalent fund inside the MiFID area. Still, there might be more exotic ones where this approach makes sense (e.g. specialized EM bonds, actively managed ETFs, …)


#5

Thanks, @acr.

We have not found any loophole and will not be breaking any rule. As a regulated institution, this could lead the authorities to remove our license.

The short answer for this is that the list was published last year and we have not revised since then. We will update it soon.

But guys, let us know if you have a special preference on certain asset classes or specific product.


#6

Super interested to hear more details on this.

I’ve read Article 13 but also paid a lot of money to overpriced law firms for an opinion on this matter.

I thought I/we could ‘make’ KIDs for US ETFs and then sell these ETFs to our clients via our chosen platform(s).

High priced legal advice was - don’t do it. The law is grey and you may be liable for inaccuracies. Your also obliged to produce a KID in every European language.

If you can provide more details on your train of thought I am very keen to hear it.


#7

Cool. When is this list of shares/ETFs going to be available?


#8

actual list of EU and USA


And regarding PRIIPs article 13. IBKR was last broker that block US ETF if I remember jun? 2018 I was very suprised that broker like IBKR hasnt done this changes with article 13 and 1 bank from Czech republic which offer services also in my country Slovakia (Fio Bank) still offered US ETF after this. I asked them and they write me exatly and appealed to Article 13 of PRIIPs. this is screenshosts from mail that i receved from my bank Fio and its in slovak language and if i correctly ttranslate to english it it means ** If you do not use a personal broker service or portfolio management, you can trade in such shares. Under Article 13 of the PRIIPS, Fio Bank as a product advisor with an investment component is required to provide key investor information (KID) well in advance of any contract the product becomes mandatory.


#9

We will release it a couple of weeks prior to our real money launching.

Although I can tell you that you can expect all major US and European stock markets from scratch.